In a 102-page ruling Friday, Judge Furman granted in part, and denied in part, a motion to dismiss certain of the claims being pursued in the GM ignition switch MDL.

Perhaps most significantly, Judge Furman rejected the plaintiffs’ claims that were based on the theory that all GM customers – including those who bought GM cars without any defect — were injured because they “thought they were buying cars made by “a ‘brand that had a reputation for producing safe and reliable cars,’” but were really buying cars from a cost-cutting company whose misconduct “result[ed] in lower resale values across the board” for the plaintiffs.

Judge Furman noted that the theory was concededly unprecedented, and emphasized that a major new legal claim should be created by the legislature, not the courts:

Plaintiffs suggest that this case is unprecedented and merits an expansion of the traditional limits on damages in consumer protection cases. But that suggestion is overblown. The number of defects, the extent of New GM’s concealment of those defects, and the scope of the recalls involved in this case may well exceed the allegations in any prior consumer protection case. But the difference is one of degree rather than of kind. Indeed, one need not look beyond the world of automobiles to find many cases in which alleged defects and the concealment thereof did damage to a manufacturer’s reputation for quality and/or safety — at least temporarily. Consider, for example, the Ford Pinto, the Ford/Firestone rollover problems, Toyota unintended acceleration, Takata airbags, and Volkswagen diesel emissions. That is, there are many cases (some of which are admittedly still pending) in which courts could have recognized the brand devaluation theory. The silence is therefore telling. Additionally, even if Plaintiffs were right that this case were unprecedented, recognizing the brand devaluation theory would open the door to a vast array of claims by consumers of otherwise merchantable products seeking damages any time the manufacturer of those products was beset by scandal or was revealed to have manufactured any defective product. If such a sea change in consumer protection policy and law is warranted, it should emerge from the legislative, not the judicial, realm.

Steptoe & Johnson LLP

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